Social protection for Spain’s unemployed

Emanuela Galasso and Martin Ravallion’s paper, available in the highlight box to the right assesses the impact of Argentina’s main social policy response to the severe economic crisis of 2002. The program aimed to provide direct income support for families with dependents for whom the head had become unemployed due to the crisis. Counterfactual comparisons are based on a matched subset of applicants not yet receiving the program. Panel data spanning the crisis are also used.

The findings are that the program reduced aggregate unemployment, though it attracted as many people into the workforce from inactivity as it did people who would have been otherwise unemployed. While there was substantial leakage to formally ineligible families, and incomplete coverage of those eligible, the program did partially compensate many losers from the crisis and reduced extreme poverty. The main policy conclusion is that overall the program does appear to have contributed to social protection during the crisis, despite the fact that it’s actual implementation differed from its design. Emanuela also presented some of the current discussions about how the program might be phased out after the crisis.

Of course, Spain is a richer country, but the unemployment problem is about the same. You have depression levels of unemployment, especially among the young and poorest parts of the country/society. For the while, Spain’s social problems given the enormous unemployment levels are still relatively low. However, if there is no return to economic growth unemployment will stay high and that is unacceptable. These people could do something beneficial and deserve some share of the cake. The flashmob at a Spanish unemployment office below is nice. However, the problem needs to be addressed by policy makers if the market can’t fix it.

Actually, the European Commission is discussing this issue. How about a policy proposal that guarantees jobs for the youth while being for by Brussels? It is just unfair that young people suffer most in the deficit countries, with youth unemployment reaching above 50% in both Spain and Greece.